Cable operators are seeing more and more competition from the telco incumbent local exchange carriers (ILECs) as those companies start to notice that cable is no longer only a residential video and data play. Cable is looking to move up-market from the residential service space to target the small and medium business (SMB) community. Conversely, the wireline telcos are moving down-market after establishing a dominant position in the enterprise market space.

This overlapping interest has led to an increase in capital spending for both industries as they compete over this lucrative market. Each type of service provider has advantages and liabilities in addressing this space, and they roughly equal out market-wide, precluding impending dominance by either segment. This has led to a market that is advantageous for the SMB from both pricing and feature perspectives. This profitable customer base has led both industries to invest in infrastructure upgrades. For the telcos, this investment has primarily focused on fiber infrastructure.

As bandwidth requirements grow, cable operators need to evaluate whether to pursue a fiber buildout strategy or stick to what has successful in the past, HFC. HFC is a combination of fiber and coaxial cable, which typically is pulled from the cable’s hub and headend locations to key residential areas to an optical node and then branches out to neighborhoods and businesses areas using coaxial cable. In addressing the commercial market, cable has generally pursued a strategy of "residential plus" based services via HFC and reserved higher end services for deployment via fiber. In many cases, the business customer will need sufficient enough bandwidth to warrant the expense of the fiber build. One example would be a multi-location hospital facility where doctors are transferring high-resolution medical images. Transferring these images saves time and money – doctors can see and analyze more patients in a shorter length of time. However, running fiber is expensive. This return on investment (ROI) hurdle has unfortunately caused cable operators to walk away from potential customers because of high build costs. Most often, equipment costs are not the largest financial concern in determining the serviceability of a commercial customer.

In an effort to insulate themselves from negative marketing campaigns on the part of the telcos, it has become more important for cable to seek Metro Ethernet Forum certification for their products and services to demonstrate to potential clients that cable technology is on par with that provided by the incumbents. In the past, this has been difficult with DOCSIS services because they do not neatly adhere to Ethernet standards, though DOCSIS was designed and deployed to carry Ethernet frames. This has classically caused some level of restraint on the part of cable operators to target their HFC infrastructure as the vehicle for delivering commercial services, which has led to capital intensive investments in fiber infrastructure that may not be warranted. Additionally, many customers cannot be served by pulling fiber because of the distance from the hub site or just the minimal number of business customers in a certain areas. In this case, utilizing the HFC plant in conjunction with a metro Ethernet service to create a virtual private network (VPN) can be the best and least expensive choice for multi-location business customers working with cable operators. The remedy Many operators are starting to look at a new deployment of "Ethernet over DOCSIS" (EOD), which is an alternative to the current CableLabs L2VPN specification using tunneling technology to create private networks for business customers. EOD provides cable operators with another service option to meet the evolving needs of SMB customers. In many cases, cable operators will still deploy fiber to commercial customers; however, where the ROI and technology needs to not require fiber, EOD provides a cost effective technology alternative that is well-understood and easily maintained. By using CableLabs certified DOCSIS 2.0 cable modems, cable operators can offer up to a 5 Mbps symmetrical service over the HFC plant, and by mid-2009 with the introduction of DOCSIS 3.0, they can scale to hundreds of megabits per second of bandwidth over the same HFC infrastructure using channel bonding.

The strength of the L2VPN tunneling method utilizing L2TPv3 is that it is media agnostic. For example, the same protocols can be used for DOCSIS endpoints as for fiber-delivered endpoints. Additionally it provides a true L2VPN service to commercial customers allowing DOCSIS to be a valid consideration as a T-1 replacement technology. The cable operator community believes it can use this technology, delivered via HFC infrastructure to address a frame relay and T-1 market that has been dominated by the telco community. Given that cable operators already have thousands of plant miles of coax either underground or aerial and close to a majority of SMBs, the obvious choice for them is to utilize this plant to serve the business customer. Special considerations One of the main questions is whether the cable operators’ current plant can support multiple business customers contending with many residential customers for the same spectrum and/or bandwidth. It is in the cable operator’s best interest to create a business and residential traffic model that looks at growth, network variables and thresholds to guide the operator to either continue offering services over the current plant, partially upgrade the HFC plant and use newly created higher spectrum to service business customers, and third, consider upgrading the entire plant to create an overlay HFC network just for business service customers. In this final option, one of the biggest questions would remain whether to pull fiber or coax to service those customers.

Given this, there are many considerations that a cable operator will have to consider to properly manage the growth of SMB customers per optical node. Here follows a list of these considerations.

1. Number of commercial users per strand (branch)? The more users, the more the cable operator will need to look at the network upgrade cost and plan a timeline for upgrade.

2. Number of plant miles to reach the farthest customer? This data input is used to calculate the overall cost of network upgrade.

3. Cost per linear plant mile for actives calculations? This data is used for the same purpose as No. 3.

4. Local division approvals to use 64-QAM (quadrature amplitude modulation) to support required upstream bandwidths? 64-QAM allows cable operators to use more spectrum on the upstream frequency for greater bandwidth, but also requires higher quality coax to transmit the signal.

5. Capacity thresholds where nodes and actives would need to be upgraded? These should be predefined for better network growth management.

6. Existing node configurations (750 MHz vs. 860 MHz node configurations, optical transmitters used)? Can the existing HFC plant support today’s business subscriber requirements plus growth over the next 24 months?

7. Number of fiber strands available to node? Will the operator need to pull new fiber to a node or used a multiplexing technology to optimize light over the fiber such as coarse wavelength division multiplexing (CWDM) or dense WDM (DWDM)?

8. Fiber ductwork available to pull fiber where needed? This is important for network cost calculations.

9. Aerial vs. underground plant? This is another time and cost factor.

10. Phase 2, node and active upgrades – are the calculations based on the above input?

11. Phase 3 – new HFC overlay or pull fiber?

12. CWDM or DWDM or additional pairs from the node to headend?

13. Node splits or not? Will a node split among residential and SMB customers alleviate the current and future bandwidth crunch?

14. How is cable modem termination system (CMTS) port growth affected by the additional commercial services users being on the same or different plant?

15. How will the deployment of DOCSIS 3.0 with channel bonding (downstream and upstream) affect the calculations?

16. Are there any customer/advanced services inputs required? Are network upgrades handled in-house or outsourced? Conclusions Having a well-thought-out long-term plan to support business service customers will allow cable operators to strike first and plan for growth of the network to support these new subscribers for many years to come. Combining technology, business modeling, service and support, and training will ensure that cable operators win the race in capturing the majority of SMB customers requiring video, voice, data – and in the future, other services such as mobile wireless will be key.

Ethernet over DOCSIS is one technology and solution that will ensure that cable operators provide enhanced levels of services to their business customers while managing the cost of network growth to support these customers.

John Lombardi is a major account manager for Cisco Systems. Reach him at jlombard@cisco.com. Bradley Bignall is a sales engineer for Cisco Systems. Reach him at bbignall@cisco.com.

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